Unfair competition will lead to reduced investments, staff cuts

Mar 25, 2012 News

-GT&T flays govt. on fibre optic cable

The Guyana Telephone and Telegraph Company (GT&T) has called for a level-playing field and yesterday criticised government’s move to unfairly introduce another fibre optic cable in yet unclear circumstances.
The US-owned company, in which government has a 20 percent share, also called on Digicel Guyana to come clean to Guyanese on its financials.
Yesterday, too, President Donald Ramotar disclosed that his administration has halted the sale of the 20 percent stake that government has in GT&T. The shares have been on the market for some time now.
During a media brunch yesterday at GT&T’s Head Office in Brickdam, Chief Executive Officer, Yog Mahadeo expressed worry over the company’s future which continues to be threatened by illegal international calls bypass and unfair competition coming from government. This may force the company to reduce the annual average of US$20M that it had been investing in Guyana.
Over recent times, the company has plugged millions into the social sector, investing in local singing and dancing competitions, cricket and a host of other events which have become annual fixtures in the Guyanese calendar.

GT&T’s CEO, Yog Mahadeo and other Company Executives at the media briefing yesterday

Insisting that GT&T over the past year has fundamentally transformed Guyana’s information and communications technology landscape, Mahadeo did not immediately rule out letting go of staff if the company continues on the same path.
“I have no plans to downscale. I may have plans to right size. Given the uncertainty that exists in the telecoms sector, we do not know. We cannot at this stage cast a three to five year plan in terms of right-sizing the company. What we can clearly say is that if the downward trend is to continue, then right-sizing would have to take place sooner rather than later.”
GT&T’s complaints have been publicised for some time now.
The CEO insisted that GT&T’s prices have consistently been lower than that of its competitor, Digicel, which has been urging for a liberalised sector. GT&T, since entering the Guyana market in the early 90’s has enjoyed a monopoly, something that the company has refuted saying it was only a monopoly on paper.
Come clean
According to Mahadeo yesterday, Digicel is deliberately not making public its financials as the company is doing well, buoyed by international operations and would be unable to prove it is making losses.
“Our local calling rates are lower; our local calling rates have been reduced while my competitor’s rate has increased four times over the past two years. My international rates to the US, Canada and other countries are lower than other countries where there is so called competition.”
GT&T this year is prepared to reveal that its net earnings has dropped an alarming 40 percent which may in the long run even affect the amount of contributions being made to sports and the social sector.
“This year we will disclose that our net earnings have declined by approximately 40 percent while our subscriber base on the comparable mobile front shows Digicel as being in the dominant role.
“In contrast, we have for years heard Digicel say (a) they are losing money or their profits are too small and (b) they have invested millions of dollars in the country.”
It is also unclear how much investment Digicel is making in Guyana. “One thing is certain, those profits do not all stay in Guyana through reinvestments or taxes, which may very well be why they refuse to share details with people of Guyana. When pressed on these matters, Digicel will only say this is private information and they are not required to report it. It is very convenient to be able to bemoan the profits or losses (whichever is convenient at the moment) with the assurance you will never have to quantify, or even prove one or the other.”
According to Mahadeo, a statistical count shows Digicel Guyana is making in excess of 100 percent of his company’s comparable mobile gross earnings.
Fibre optic
Meanwhile, on the issue of government’s decision to bring its own fibre optic cable and another one for the Guyana Power and Light, Mahadeo hinted that the company may have erred in submitting its plans to deploy a Third Generation (3G) and Long Term Evolution (LTE) development to government a year ago. “GT&T can say we openly presented our plan to the Government of Guyana (GoG) for 3 G and LTE development in Guyana over a year ago. It is coincidental that GoG is launching its own LTE network and another competitor is building its 3G network while GT&T was locked and cast away in a corner to “wait”.”
More troubling for GT&T was the fact that government’s deployed fibre optic looks suspiciously similar to one the telephone company had submitted.
“They look remarkably similar to GT&T’s deployment plans. It is fair to assume that both current and potential investors are wondering whether the Government is about to become a competitor and how is it possible to compete with “Free!”
Regarding the announcing that GPL is laying its own fibre optic cable also, the CEO said that the company needs to be clear about its plans.
“The uncertainty created by the development of these networks and the ambiguity surrounding their purpose, ostensibly for E–governance but looking more like government-run retail facilities, risk chilling investments by third parties.”
Taxpayers’ Money
The telecoms company also noted that the government through its fibre optic cable from Brazil is using tax payers’ money– without any oversight or regulation. “How can we compete with a system that takes our own money and our own plans to build to compete with us? This has been our position from the inception and from the inception they have assured us of the project being done for e-governance. We are learning from the streets that their definition of e-governance is much wider that one can assume.”
Government has announced that the Brazil cable will be used to allow internet for the 90,000 laptops it is distributing in the One Laptop Per Family project. GT&T is contending that it has the capabilities having spent US$60M with neighbouring Suriname to land its own cable.
The introduction of the Blackberry service is but part of the company’s plans being rolled out, despite GT&T’s disadvantage with its competitor, Digicel which has 24 telecoms properties in the Caribbean.
Over the past year, the company says that it has added over 14,000 new DSL subscribers. This was in the face of rampant vandalism.
The company has also added 13 new cell sites within the last few months across the country to improve voice and data connectivity.
Already, according to the CEO, the company has the capabilities of allowing internet connections for IPADs, I-Phones and products on demand.
Regarding the legislation tabled by government last year to liberalise the telecoms sector, Mahadeo insisted that it is deeply flawed and “we cannot support any plan that fails to bring about fair, free market competition and does not benefit consumers. Legislation that introduces heavy bureaucracy, inordinate ministerial discretion, higher costs and unfair burdens on GT&T or new entrants will not serve the best interest of Guyana.”
He noted that GT&T had demonstrated seriousness about reform, by offering specific analysis and comments on the provisions. The company insisted it has the money to invest.